3. NVIDIA Corp (NASDAQ:NVDA)
Number of Hedge Fund Investors: 193
Brad Gerstner, Altimeter Capital Founder & CEO, said in a latest program on CNBC that he is adding to his NVIDIA Corp (NASDAQ:NVDA) position despite having a “bomb shelter” market posture.
“Remember we entered today in kind of bomb shelter positioning. We had puts on the NASDAQ, we had a tremendous number of shorts, and we were sitting in a lot of cash. We only had 50% of our long book even positioned in the market. So we’re dramatically outperforming on a day like today. So we’re going from the bomb shelter to simply, you know, our safety positioning. And that means adding about 15% of net exposure, and we’re adding it in the areas that we believe we’re continuing to see secular growth. And as you know, the growth and the demand for GPUs is off the charts. You hear it from OpenAI, you hear it from Google, you hear it from Elon, you hear it from others. I know there’s a debate about that, but that’s the side of the debate that we’re on.
And then, although we saw these tariffs announced yesterday, we also saw a list of exceptions. And one of the list of exceptions, wise exception, is semiconductors. And I think the reason that semiconductors are being excepted is because for us to charge a tariff on our own chips, right, which are fabricated in Taiwan because they can’t be fabricated in the United States—we don’t have the fabs yet—TSMC, who he mentioned in his speech yesterday, has committed to massive investments as a result of the president’s policy in Arizona to build cutting-edge fabs. But right now, he gave them an exception because we know if we increase the cost of these chips that we design to our own companies like Meta, like Google, like Microsoft, like OpenAI, we’re only shooting ourselves.”
Nvidia is facing challenges at several levels. Competition is one of them. Major competitors like Apple, Qualcomm, and AMD are vying for TSMC’s 3nm capacity, which could limit Nvidia’s access to these chips. Why? Because Nvidia also uses TSMC’s 3nm process nodes. Nvidia is also facing direct competition from other giants that are deciding to make their own chips. Amazon, with its Trainium2 AI chips, offer alternatives. Trainium2 chips could provide cost savings and superior computational power, which could shift AI workloads away from Nvidia’s offerings. Apple is reportedly working with Broadcom to develop an AI server processor. Intel is also trying hard to get back into the game with Jaguar Shores GPU, set to be produced on its 18A or 14A node.
Harding Loevner Global Developed Markets Equity Strategy stated the following regarding NVIDIA Corporation (NASDAQ:NVDA) in its Q4 2024 investor letter:
“For the full year, the composite’s underperformance was primarily due to poor stock choices in the US. NVIDIA Corporation (NASDAQ:NVDA), which we sold in the first quarter and repurchased in the fourth quarter, caused almost two-thirds of the strategy’s underperformance. We were hurt by our underweight as NVIDIA’s stock price soared during the first half of the year on the insatiable demand for the company’s graphics processing units (GPUs), which enable generative Al computing.
After ASML’s disappointing outlook led industry valuations to compress, we added a strong company back to the portfolio-NVIDIA.
There were two main reasons we sold NVIDIA last February (after holding the stock for more than five years). First, its biggest customers-data-center behemoths Amazon, Alphabet. Meta Platforms, and Microsoft-have been designing their own custom semiconductor chips, called application-specific integrated circuits (ASICS), that could eventually erode NVIDIA’s dominance. Second, it was unclear to us whether the adoption of Al by large enterprises will be as fast and meaningful as the optimistic views suggested…” (Click here to read the full text)
